Galaxy Digital swings to profit with $302 million net income in Q4

Galaxy Digital, the New York-based cryptocurrency financial services company founded by Mike Novogratz, has reported a strong turnaround in its financial performance.

The digital asset specialist posted $302 million in net income for the fourth quarter 2023, up 421% from the third quarter, where the company reported a net loss of $94 million.

The Q4 earnings mark a substantial recovery from the end of 2022, when Galaxy Digital faced a net loss of $288 million. The company attributes its robust fourth-quarter performance to the appreciating prices of key cryptocurrencies and growth across its diverse operating sectors, including lending, trading, mining, and banking services.

For the start of 2024, Galaxy Digital has continued its positive trajectory, generating an estimated before-tax income of “approximately $300 million” through February. The increase was primarily due to the surge in digital asset prices and its operating businesses’ expansion.

Furthermore, the firm’s assets under management (AUM) have seen considerable growth, exceeding $10 billion at the end of February. This includes an investment of more than $27 million in Celestia. This figure nearly doubled from the fourth quarter of the last year when AUM was approximately $5.2 billion.

Additionally, Galaxy Digital’s mining revenue rose to $18.7 million in the fourth quarter, up 31% from the previous quarter.

“Our average marginal cost to mine in the fourth quarter increased relative to prior quarters due to fewer opportunities to economically curtail our mining operations and a higher network hashrate. For the full year 2023, Galaxy mined 1,077 bitcoin from our proprietary mining operations at an average marginal cost to mine of less than $8,000,” the company said in its statement.

Earlier in June, a US federal judge relieved Galaxy Digital of any obligation to pay damages following the dismissal of a lawsuit related to its terminated merger with crypto asset custodian BitGo.  The firm, run by Wall Street stalwart Mike Novogratz, exercised its right to terminate the acquisition agreement, citing BitGo’s failure to deliver, by July 31, 2022, audited financial statements for 2021.

The court sided the crypto lender’s decision to cancel its planned $1.2 billion acquisition, removing the potential financial burden associated with the abandoned tie-up. However, BitGo said it plans to appeal the court’s ruling as it believes that Galaxy wrongfully terminated the agreement and will continue to pursue the same position through the appeals process.